Greece appeared headed for a messy exit from the euro, with uncertain consequences for the region, while concerns over the Chinese economy were roiling financial markets around the world.
French GDP growth in the second quarter was nearly exactly flat versus the preceding quarter, when a consensus of economists’ predictions had a 0.2% pencilled in, as well as forecasts from France’s national INSEE statistical bureau of 0.3%. The reasons behind the growth are thought to be a weaker euro and strong consumer spending. Norwegian oil and gas firm, Statoil, was down 3.2 percent, while oil services company, Subsea 7, was also down 3.7 percent. “This risk could be compounded by negative knock-on effects from interest rate increases in the United States on growth in EMEs (emerging market economies)”. The price-adjusted GDP was up by 1.6% in the second quarter of 2015, following +1.2% in the first quarter of 2015.
Still, Oxford Economics’ Nixon says the eurozone needs more help if it is to grow more strongly, and highlights the importance of a long-needed pick-up in investment.
For Germany, consensus expectations were for 0.5% GDP growth, so an actual growth rate of 0.4% only represents a slight miss. Corporate investment grew by 0.2 per cent in the second quarter, reaching their highest level since 2008.
“Today’s zero figure is a rather bad surprise, dampening hopes of significantly above 1pc GDP growth this year”, said Julien Manceaux, an economist at ING.
The country could get 6.04 billion euros in bridge financing if euro zone finance ministers cannot agree on the planned third bailout for Athens when they meet on Friday, according to German newspaper Bild, citing a European Commission proposal for the meeting. Spain’s economy expanded 1 percent, the fastest pace in more than eight years, data showed last month. Germany grew 0.4 per cent as was expected.
The euro tumbled 0.45% and 0.47% against the dollar and the pound respectively and lost 0.53% against the yen, while Brent crude dropped 0.86% to $48.80 a barrel. Output in France stagnated after a strong jump in the first three months of the year.
Economic growth in the Netherlands also fell short of estimates in the three months through June, at 0.1 percent.
“We are fairly confident about the recovery continuing despite the potential headwinds”, said Mark Wall, chief economist at Deutsche Bank.